Travel Insurance – Everything you need to know


What is a travel insurance?

Travel insurance is coverage designed to protect against risks and financial losses that could happen while traveling. The risks range from minor inconveniences such as missed airline connections and delayed luggage all the way to more serious issues including injuries or major illness.

What does travel insurance cover?

Travel insurance can vary, but policies generally provide coverage for three things: protection for your financial expenses, protection for your well-being and protection for your personal belongings.

When shopping for a policy, look for these benefits:

Trip cancellation coverage
Your travel insurance policy can reimburse you for prepaid, non-refundable trip deposits if a trip is canceled for a covered reason. These outlays can include airline tickets, hotel rooms, rental cars, tours and cruises, says Daniel Durazo, spokesperson with Allianz Travel Insurance.

Examples of acceptable reasons to cancel a trip include illness, injury or death of the traveler, a close family member or a traveling companion; military deployment or civil unrest; a serious family emergency, even unplanned jury duty.
Injury or sickness:
Travel insurance can help protect you from medical expenses abroad that your normal health insurance doesn’t cover. Most health insurance plans don’t provide full coverage in foreign countries and some health plans provide no coverage at all, including Medicare. Travel insurance works in addition to your everyday health insurance and can help supplement medical costs if you get sick or injured before or during your vacation.
Lost luggage
Travel insurance can help cover expenses stemming from lost or stolen luggage. This is especially useful if an airline loses your bags, as it can be very difficult to get them to pay for lost luggage. In the United States, the Department of Transportation (DOT) requires airlines to compensate fliers up to $3,300 for lost baggage. In foreign countries that amount is a maximum of $1,750. But to receive those maximum amounts, passengers must provide receipts proving the value of the lost bags and their contents. And some airlines require that the claim be filed within 21 days.
To make matter worse, DOT doesn’t define when baggage is officially lost (as opposed to just “delayed”). Overseas, a bag is only considered “lost” after 21 days. For delayed bags, DOT only requires airlines to provide victims with enough money to buy necessities like clothing, medicine and toiletries.
Last-minute cancellations
Travel insurance can help cover costs stemming from trip cancellations. Most resorts or cruise lines won’t give you a full refund in the event of a cancellation. If you cancel two weeks or more before your trip, most resorts will at least charge a cancellation fee; many cruise lines might only give you a 25% refund or will give you partial credit on another cruise. If you cancel within two weeks of a trip, with most companies you won’t give any refund whatsoever. Unforeseen circumstances happen, and you want to be covered just in case.
Coverage beyond your credit card
Some credit cards provide limited coverage, with annual limits and restrictions for cancellations and interruptions (if they offer cancellation/interruption coverage at all). However, few credit cards offer coverage for the most expensive travel risks: medical expenses or emergency evacuations, which travel insurance can cover.
Other reasons include: your travel supplier stops offering services for 24 hours due to a natural disaster, severe weather or a strike, your home or destination becomes uninhabitable or you or a traveling companion lose your job after you purchase your policy.

You typically can’t cancel your trip for any reason and expect to be reimbursed just because you have travel insurance. For example, if you have a fight with your friend and don’t want to travel with her, or you change your mind about taking a long-haul flight to Hawaii, these are not covered reasons.

If you want the highest level of flexibility to make changes to your trip, consider adding “cancel for any coverage” to your policy. Cancel For Any Reason (CFAR) plans will bump up the cost of your travel insurance by about 40%, but it gives you the latitude to cancel your trip if you need to as long as you meet certain requirements like canceling no later than 48 hours before your scheduled departure.

You won’t be reimbursed for 100% of your trip costs. Typically, CFAR coverage will reimburse between 50 to 75% of trip expenses.

What travel insurance might not cover

It’s important to know that while there are many reasons to buy travel insurance, certain things may not be covered under travel insurance. If you have a preexisting condition, look for a plan that provides a preexisting condition waiver. If you’re visiting an area with political unrest, check into what coverage a policy provides if you wish to cancel due to problems in the area. Travel insurance policies cover some incidences of tour operator defaults due to financial issues. Look into how that’s handled before booking your trip.

How to find an insurance carrier

Purchasing travel insurance is relatively easy, and there are lots of different options in the marketplace. If you have never purchased a travel insurance plan, a good place to start is sites like, CoverTrip or Squaremouth, which let you compare different carriers based on both price and coverage. You simply fill out a brief questionnaire about the trip and the traveler.
The benefit of using aggregator sites is shoppers have the ability to view the entire travel insurance marketplace and compare policies all in one place. Squaremouth also provides verified customer reviews to help travelers feel confident about the policy they are purchasing.
There is no charge to use Squaremouth, as they receive commission on every sale directly from the provider, and do not charge any type of fee to consumers.
Beyond comparison sites, you can always visit a specific travel insurance carrier’s website for a quote or call the company’s toll-free customer service number for information.
CNBC Select has reviewed many of the top travel insurance companies and named AXA Assistance USA Travel Insurance as the best choice overall with three tiers of coverage to choose from and a high financial strength rating. Our runner-up was Travel Guard® Travel Insurance for its offerings available online and coverage for one related child age 17 or younger.

How much is travel insurance?

Travel insurance can vary a lot depending on how much coverage you’re getting and how expensive your trip is. CoverTrip advises its customers that travel insurance plans cost between 4 to 10% of the total trip cost. So if you’re spending $5,000 on a European tour, your insurance could be anywhere from $200 to $500.
Of course, there are budget plans out there that could cost (and cover) less. And you could also shell out for premium coverage so you can take advantage of a “cancel for any reason” policy. Whichever plan you choose, make sure you read the fine print so you understand what you’re paying for.

Is travel insurance worth it?

Travel insurance can be useful in many scenarios, from a medical emergency forcing you to cut your trip short to a tropical storm ravaging your destination. If you’ve spent a lot of non-refundable money on your trip, you could be at a loss if something goes awry.
There are several scenarios where travel insurance could be worth it, including if:

You’re traveling internationally where your US-based health insurance won’t apply
You’ve spent a lot on prepaid, non-refundable expenses
You’re traveling to a remote area
Your flight involves multiple connections or destinations
For those who have spent a good amount of money on their trip, getting trip insurance generally makes sense whether that’s through a separate policy or through a credit card you booked the trip with.

Your credit card may offer built-in travel protection

You may have a credit card in your wallet that offers travel insurance. “Travel insurance is a common benefit for credit cards that often comes at no additional cost to the cardholder,” says Francis Hondal, president of loyalty and engagement with MasterCard. “It can also be extremely easy to take advantage of it—the key is knowing what coverage you have so you don’t waste money on additional coverage you don’t need.”
Coverage is automatic when you make a relevant purchase, she says. “So, for instance, if you have trip cancellation insurance on a card, you’re covered when you book a flight using that card. Same goes for checking your bag and activating your lost luggage protection,” Hondal says.
It’s important to know if and how you’re covered when making travel-related purchasing decisions. Mastercard offers a digital insurance platform, You can usually find more information on your credit card’s website.
To ensure you reap the travel insurance benefits your card offers, you must charge the trip expenses on your card. Where credit card travel insurance can shine is if you run into weather problems or mechanical delays, or if you get sick while traveling or even if your luggage gets lost or delayed,” says Ted Rossman, senior industry analyst,
The Chase Sapphire Reserve® is an industry leader in these areas, he says. It offers up to $10,000 per person and $20,000 per trip in the form of trip cancellation/trip interruption coverage. If you run into a flight delay lasting at least six hours, you can get up to $500 per ticket to book a different flight, stay in a hotel, buy food, etc.

If your luggage is late, you can get up to $100 per day for up to five days to buy necessities.
“If something really bad happens while you’re abroad, [Chase Sapphire Reserve travel insurance] will pay for up to $100,000 of emergency evacuation and transportation coverage,” says Rossman. “And the Sapphire Reserve also gives primary rental car insurance benefits, meaning that you can decline the rental car company’s expensive coverage, and you won’t need to go through your personal car insurance if you get into an accident while renting a car.”

What you should know about Covid-19 and travel insurance

When it comes to Covid coverage, travel insurance plans can vary from one another, so you should read your policy carefully and ask your insurance provider if you have questions, says Godlin.
Also, regulations around travel have evolved during the pandemic, with some countries requiring specific travel insurance coverage for entry. “As a result, we’re seeing new policies emerge to directly meet those needs,” she says.

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